You might think you know when the Commissioner is obliged, by law, to give you reasons for a decision he’s made, but you won’t know it as well as the Inspector-General and Tax Ombudsman (IGTO) have essayed, in the following article, they developed and published on the taxpayer’s right to receive reasons for decision from the Commissioner of Taxation. In the main, the article finds that there are only limited instances in which the law imposes an obligation on the Commissioner to the provide reasons. However, they do note that as a matter of administrative practice, the Commissioner does provide reasons, even where there’s no legal requirement to do so.
See below for the article and a short introduction to it.
Extracted introduction
The following article examines the legal and administrative requirements for the Commissioner of Taxation (Commissioner) to provide reasons for administrative decisions and actions taken by ATO officers.
Setting clear expectations and providing a framework for determining when the Commissioner should or must provide a taxpayer with reasons for a decision, and clarity on what those reasons should contain, are touchstones of good tax administration.
The Commissioner may choose to give reasons, even in the absence of a statutory or common law obligation to do so. This is confirmed in both the Taxpayers’ Charter and Practice Statement Law Administration PSLA 2013/1 – Commissioner’s guidance on how to prepare a statement of facts and reasons under s13 of the ADJR Act.
Taxpayer rights to reasons support voluntary compliance
In its Practice Note on Principles of Good Tax Administration, the OECD encourages revenue authorities to apply tax laws in a “fair, reliable and transparent manner”.3 The OECD also notes that:
The promotion of voluntary compliance should be a primary concern of revenue authorities. The ways by which revenue authorities interact with taxpayers and employees impact on the public perception of the tax system and the degree of voluntary compliance. Taxpayers who are aware of their rights and expect, and in fact receive, a fair and efficient treatment are more willing to comply.
These principles are also reflected in the IGTO’s summary of features of good tax administration, many of which support the need for clear communication of reasons for decisions and actions, including:
▪ providing accountability for decisions;
▪ improving certainty and consistency;
▪ ensuring correct administration; and
▪ providing administration that is professional, respectful and collaborative.4
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